By Todd Waller
Historically low real estate inventory can be a daunting prospect for buyers and sellers alike. Real estate professionals use “months of inventory”—the number of months it will take to sell the current number of active home listings in a given market—to gauge local conditions. Over 6 months of inventory is called a “buyer’s market”; between 3 and 6 months of inventory is a “neutral market”; less than 3 months of inventory is a “seller’s market.”
Nationally, 2014 saw a thin inventory of homes for sale and good buyer demand for those homes.
We remain in that “seller’s market” in many parts of the country heading into spring.
For buyers, low inventory levels can be an extremely frustrating experience. While there is simply not much inventory to choose from, what homes there are to consider sell rapidly. Remember, there are a few other buyers looking at the same marketplace as you, attempting to find a home among the few listings available. Should you find yourself as a buyer in a market where inventory conditions are tight, here are a few things to keep in mind to ensure success:
Be prepared! Like the Boy Scout motto, be sure you’ve done your groundwork and are ready buy. This means talking with your lender to make sure you are firm on your purchasing capabilities. Having the lender’s pre-approval in hand is a must before looking at homes. Being prepared also means having a good idea about what you want in your next home. If you’re not solid on the home you want, you could find yourself frustrated.
Communicate. Clearly. Often. With all of your real estate service providers, communicate clearly and often to ensure a smooth transaction. Your lender and real estate agent should know exactly what you’re looking for, and should help lay out a road map to achieve your goals.
Be Patient. In the depths of a seller’s market, it may seem as though there is nothing for you to purchase, or you may get outbid. Trust me; your home is out there. The sellers of your future home are probably going through the same thought process as you, “Is there a home for us in that town? I don’t see anything I want to purchase now. I don’t want to move twice.”
So, eager buyers, stay positive! And, to all those reading this post, stay tuned because there’s more next week as I delve into what these low levels of industry means for today’s seller.
TODD WALLER is a REALTOR® with Berkshire Hathaway HomeServices Snyder & Company, Realtors® in Ann Arbor, MI. Visit his website www.toddwaller.com and connect with him on Twitter, Facebook and LinkedIn.